Trade gap woe as exports suffer

BRITAIN'S trade gap ballooned to a record last year, highlighting the problems of exporters struggling with a downturn in world markets.

The trade in goods deficit rose to £33.6bn from £30bn the previous year. The deficit in goods and services was £19.9bn, the worst since 1989.

The trade gap is a vivid illustration of Britain's unbalanced economy. While exports have slumped because of weak global demand, strong consumer spending is sucking in imports.

But the City is relaxed about the growing shortfall. Once it would have triggered a run on the pound, but the overall current account position is significantly better than the trade position, thanks to strong investment income.

The trade gap is also a reflection of a weak world economy rather than problems with the British economy. Sterling was little changed today at $1.43.

Meanwhile, Chancellor Gordon Brown's public finances notched up a £12.2bn surplus in January because of bumper corporation and income tax receipts. For the financial year to date, there was a surplus of £2.2bn. Economists said Brown was on course to undershoot his full-year forecast of a £6bn deficit.